All self-insured employers in New York should pay special attention to a recent ruling by the State Supreme Court in Albany County regarding Group Self-Insured WorkerAca,!a,,cs Compensation Trusts. In Held v. State of New York WorkerAca,!a,,cs Compensation Board, the Court held that the WorkerAca,!a,,cs Compensation Board could not levy assessments against solvent Group Self-Insured Trusts (GSITs) and self-insurers to make up for lack of sufficient monies from insolvent GSITs without first meeting certain condition precedents contained in the WorkerAca,!a,,cs Compensation Law. Background All employers in New York are required to provide WorkerAca,!a,,cs Compensation Insurance for their employees in the event they are injured on the job. WorkerAca,!a,,cs Compensation Law A,?50 allows a Aca,!A"non-publicAca,!? (private sector) employer to provide WorkerAca,!a,,cs Compensation in one of four ways: (1) through the New York State Insurance Fund; (2) by purchasing the insurance from an approved private insurance company; (3) by Aca,!A"self-insuring,Aca,!? i.e., by paying the claims themselves, so long as the companies demonstrate they can do so to the WorkerAca,!a,,cs Compensation Board (Aca,!A"BoardAca,!?)(this is usually done by only very large companies); or (4) by joining and paying premiums through a Aca,!A"Group Self-Insured TrustAca,!? (Aca,!A"GSITAca,!?). GSITs are authorized by WorkerAca,!a,,cs Compensation Law A,?50 (3-a). Under this section, employers performing related activities in a given industry may adopt a plan for self-insurance as a group to provide workerAca,!a,,cs compensation to their employees. GSITs were seen as a way for smaller companies to obtain lower premiums by allowing companies in the same general industry with similar risks to Aca,!A"band togetherAca,!? and receive volume discounts. Importantly, under A,?50 (3-a) each employer who joins a GSIT contractually agrees to assume the workerAca,!a,,cs compensation obligation of each associated member. Therefore, if certain employers in the GSIT go out of business or are unable to pay its workerAca,!a,,cs compensation claims or assessments, every other employer within that GSIT is Aca,!A"jointly and severallyAca,!? liable for those employersAca,!a,,c claims and assessments. Aca,!A"ClaimsAca,!? are those payments paid to injured workers. Aca,!A"AssessmentsAca,!? are payments that each employer makes that are used to fund the workings and infrastructure of the WorkerAca,!a,,cs Compensation Board, since the Board is a Aca,!A"self-fundedAca,!? state agency. GSITs are managed by trustees and a third-party administrative company that handles billing and claims. In the last several years, at least nine GSITs in New York have defaulted on the payment of claims and assessments or have dissolved. This means that a number of GSITs have been found to not have sufficient reserves to pay all of their present and projected claims and assessments. In the beginning of 2008, in an effort to make up for the lack of sufficient monies in these Aca,!A"failedAca,!? GSITs, the Board imposed massive assessment increases on a number of the Aca,!A"healthyAca,!? GSITs. One GSIT was hit with an 11,000% increase from their 2007 Assessment. The Board based its action in increasing the assessments against the Aca,!A"healthyAca,!? GSITs on WorkerAca,!a,,cs Compensation Law A,?50(5)(f), which states that whenever the Board determines Aca,!A"the compensation and benefits provided by this chapter may be unpaid by reason of the default of an insolvent private self-insured employer. . . .the [Board] shall levy an assessment against all private self-insured employers . . . to assure prompt payment of such compensation and benefits.Aca,!? (emphasis added). Held v. State of New York WorkerAca,!a,,cs Compensation Board A group of the Aca,!A"healthyAca,!? GSITs (Aca,!A"PetitionersAca,!?) challenged the BoardAca,!a,,cs massive increases against them to make up for the failed GSITs, and brought a lawsuit against the Board in Albany County Supreme Court (Held v. State of New York WorkerAca,!a,,cs Compensation Board, Index No. 2957-08). A key legal question focused on the meaning of Aca,!A"private self-insured employersAca,!? in A,?50(5)(f). The Petitioners argued that this term only applied to individual companies that self-insure, and not to GSITs. The Board argued that this term was meant to apply to all private self-insurers, including those self-insuring as a group under a GSIT. In a Decision and Order dated July 7, 2008, Justice Kimberly OAca,!a,,cConnor agreed with the Board on this issue, finding that Aca,!A"private self-insured employersAca,!? includes both self-insurers and those that insured via a GSIT. Thus, the Aca,!A"healthyAca,!? GSITs and the self-insured employers are subject to the assessments under A,?50(5)(f) to make up for the Aca,!A"insolventAca,!? private self-insured employers. However, Judge OAca,!a,,cConnor then found that the Board had prematurely exercised its authority in levying the assessments against the Aca,!A"healthyAca,!? GSITs (and self-insurers), finding that the Board could not impose the massive increases until it had met certain condition precedents contained in the statute. Therefore, the assessments were annulled and vacated.